Bear Call Spread Strategy
Sell a lower strike call, buy a higher strike call. Collect premium on bearish bets.
What is a Bear Call Spread?
A Bear Call Spread (credit spread) involves selling a lower-strike call and buying a higher-strike call for protection. Collects premium upfront. Profits when stock stays below short strike. Defined risk version of naked short call.
When to Use a Bear Call Spread
Use when bearish or neutral. Best in high IV environments. Typical setup: 30-45 DTE, short strike at 1 SD OTM for ~70% POP. Popular for resistance levels.
Key Formulas
- Max Profit
- Net credit × lot size
- Max Loss
- (Width of spread - Net credit) × lot size
- Breakeven
- Short call strike + Net credit
Example Trades
Sell AAPL $210 Call for $2, Buy $215 Call for $1. Net credit $1. Max profit $100. Max loss $400.
Sell NIFTY 22800 Call for ₹120, Buy 22900 Call for ₹80. Net credit ₹40 → ₹2,600 (× 65). Max profit ₹2,600. Max loss ₹3,900.
Common Mistakes to Avoid
- Selling during strong uptrends
- Ignoring upcoming earnings
- Holding losing trades past 2x credit
- Strikes too close to current price
Related Strategies
Bear Call Spread FAQ
What is a Bear Call Spread?
A Bear Call Spread (credit spread) involves selling a lower-strike call and buying a higher-strike call for protection. Collects premium upfront. Profits when stock stays below short strike. Defined risk version of naked short call.
When should I use a Bear Call Spread?
Use when bearish or neutral. Best in high IV environments. Typical setup: 30-45 DTE, short strike at 1 SD OTM for ~70% POP. Popular for resistance levels.
What is the maximum profit and loss for a Bear Call Spread?
Max profit: Net credit × lot size. Max loss: (Width of spread - Net credit) × lot size.
What is the breakeven price for a Bear Call Spread?
Breakeven: Short call strike + Net credit. US example: Sell AAPL $210 Call for $2, Buy $215 Call for $1. Net credit $1. Max profit $100. Max loss $400. Indian-index example: Sell NIFTY 22800 Call for ₹120, Buy 22900 Call for ₹80. Net credit ₹40 → ₹2,600 (× 65). Max profit ₹2,600. Max loss ₹3,900.
What are common mistakes when trading a Bear Call Spread?
Common mistakes include: Selling during strong uptrends; Ignoring upcoming earnings; Holding losing trades past 2x credit; Strikes too close to current price.
Ready to Build a Bear Call Spread?
Open the strategy builder to see live Greeks, P&L charts, and probability of profit for this strategy on any stock.
Launch Builder →